Brushman India Ltd Directors Report

BRUSHMAN (INDIA) LIMITED ANNUAL REPORT 2008-2009 DIRECTORS REPORT The Members, Brushman (India) Limited Your Directors have pleasure to present the 17th Annual Report along with audited accounts of the Company for the period ended 31st March, 2009. FINANCIAL DATA Rs. Rs. Current Year Previous Year (2008-2009) (2007-2008) Total Revenue 6,38,130,772 718,467,536 Profit before interest, Depreciation and tax 15,583,441 142,762,229 Less: - Interest (net 106,174,495 67,853,647 - Depreciation 15,492,221 10,808,682 Profit/Loss before tax (187,631,650) 64,099,900 Less: - Provision for tax (6,888,846) 12,980,441 Profit/(Loss) after tax (180,742,804) 51,119,459 Add:- Excess Provision for Tax of earlier year (s) written back - (3,525,545) Profit/(Loss) carried to the Balance Sheet (180,742,804) 47,593,914 BUSINESS REVIEW: MANUFACTURING: As the members are aware, your Company is in the business of manufacturing and trading of paint brushes etc. Due to global recession which has grossly affected the housing, infrastrueture and reality sector in the economy has in turn, negatively impacted the manufacturing business line of the Company during the last fiscal. Your directors would like to inform you that the management is hopeful and positive thai the Company would definitely do better in the coming period(s) as the markets globally is now showing signs of economic recovery. Your Company is operationalizing through its manufacturing plant in Pantnagar, Uttarakhand and is the leading paint brush manufacturing Company in India. The management is realigning its manufacturing expansion plans in the light of present economic condition and would take suitable decisions in the best interest of the Company. TRADING DIVISION In the trading division your Company has deferred its plan(s) of expansion as the global recession has majorly effected the retail sector. Your Company holds the distributor rights for leading brands of the world in trading segment and hopeful that this business line would revive soon as the market is recovering and demand for niche products is picking up. COMPANY BRANDED SALONS/ACADEMIES; Your Directors wish to inform you that due to global recession and current slowdown in the market the management had during the year decided to close down the operations of the following salons due to high rentals and other input costs which had contributed towards their operational unviability in the current scenario. Following is the details of the salons/academies which have been closed down: - Keune the salon at Infinity Towers, DLF Phase III, Gurgaon - Keune the salon al MGF City Centre Mall, Rajouri Garden, New Delhi - Keune the salon at TDI Mall, Rajouri Garden, New Delhi - Keune the salon at North Square Mall, Pitampura, New Delhi-110034 - Scratch the Academy at IIIrd Floor, E-5, Part-II R.K. Jewellers Building, New Delhi- 110048 Your directors wish to inform you that following salons/academies are operational as on date: - Keune the salon at Greater Kailash -1 (M Block market), New Delhi - Keune the salon at MGF Metropolitan Mall, Gurgaon, Haryana. - Keune the salon at J-12/14, Rajouri Garden, New Delhi - Keune the salon at Mariplex Mall, Kalyani Nagar, Pune - Keune The Academy, E-5, South Extension, Part-II. IInd Floor, R.K. Jewellers Building, New Delhi-l 10048 BROADBASING OF EQUITY CAPITAL Your Company has duly cancelled 35,50,000 convertible warrants of Rs. 125 per warrant on 21.12.2008 on which Rs. 12.50 per warrant has been paid. The Company has forfeited the paid up amount of Rs. 12.50 per warrant on 35,50,000 convertible warrants and transferred the amount to reserve. Your Company has duly got in principle, listing and trading approval from the respective stock exchange(s) for listing of 39,10,000 underlying equity shares in regard to GDR issue of USD 12 million dt. 31.7.2008. Your directors confirm that the increase in paid up equity share capital took place in accordance with and in conformity to SEBI Guidelines and DSE directives. TRADING OF EQUITY SHARES The Equity shares of your Company are traded at Bombay Stock Exchange (BSE) under the Indonext portal and are listed on Delhi Stock Exchange, Madras Stock Exchange, Cochin Stock Exchange, Calcutta Stock Exchange, Ahmedabad Stock Exchange respectively. DIVIDEND The Board of Directors of your Company have not recommended any dividend for the year ended 31st March 2009. DIRECTORS In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. R. N. Suri retire by rotation at the ensuing Annual General Meeting and is eligible for reappointment. Mr. Rohit Sood has been appointed as wholetime director of the Company w.e.f. 13.2.2009. During the year Mr. Pawan Sabharwal and Mr. Sundeep Chhabra has resigned as director of the Company w.e.f. 6th September, 2008. The Board of Directors show their sincere appreciation for the services given by Mr. Pawan Sabharwal and Mr. Sundeep Chhabra during their tenure. Mr. Anuj Chowdhry has resigned as director of the Company w.e.f.10th December 2008. The Board of Directors show their sincere appreciation for the services given by Mr. Anuj Chowdhry during his tenure. Mr. V Swaminathan has been appointed as additional director of the Company w.e.f 29.12.2008 Mr. Dinesh Gulati has resigned as director of the Company w.e.f. 13th February 2009. The Board of Directors show their sincere appreciation for the services given by Mr. Dinesh Gulati during his tenure. FIXED DEPOSITS The Company has not accepted any deposit covered by Companies (Acceptance of Deposit) Rules, 1975 during the year under review, AUDITORS M/s Saxena & Saxena, Chartered Accountants, who had been the auditors of the Company, have confirmed their eligibility to be re-appointed as Auditors of the Company at the ensuing Annual General Meeting. The Board of Directors recommends re-appointment of M/s Saxena & Saxena, Chartered Accountants, as Auditors of the Company for the approval of the Members and to fix their remuneration. OPPORTUNITIES, THREATS AND FUTURE OUTLOOK Your Company is well poised to expand its operations and performance in accordance with its business plan. Your Company will explore possibilities for new business opportunities. The overall economic scenario continues to be subdued in the short term perspective and as such, till the overall economy gets an upward momentum the pressure on yield would remain. However the Budget of 2009-10 has provided various stimuli for industrial growth in the country and various measures announced are expected to provide positive impact on many industrial sectors in the country. HUMAN RESOURCES One of the biggest challenges faced by any organization is talent acquisition and retention. Depending on the competencies required potential employees are sources from various sectors. To attract and motivate the best of talent, we create a congenial work environment that rewards and recognizes our performers. Brushman firmly believes that its human resources are the key to business success. We promote a culture that is open and performance driven built on fostering interdependence, commitment and excellence. In our vision to live upto the aspirations of our employees and customer base we are creating an environment where all its employees can fulfil their dreams along with meeting organizational objective. BUSINESS AND QUALITY EXCELLENCE During the year to broaden and deepen the quality journey across the organization we have deployed full -time quality resources to functions like marketing, HR, Legal, Finance and Accounts, Public Relations and Corporate Communication and IT. Brushman would strive to instil trust in its valued customers, employees, stakeholders, government agencies, foreign principals and suppliers, bankers and various other agencies associated with it. Your Company would provide par excellence service to its customers which would in turn to unprecedented growth of the Company in the years to come. Quality is of paramount importance and your Company strives to further improve our systems and processes. We arc constantly checking the quality processes with the reality checks and we are providing training to our new employees to build an overall quality culture rather than creating processes that just meet certification requirements. SUBSIDIARY COMPANIES During the year under review your Company has following subsidiaries: 1. Bodyline International Private limited 2. High Street Lifestyle Brands Limited 3. Headstart Fashions Limited 4. Scratch Nails Limited 5. Toni & Guy (India) Limited 6. Spaone Beauty and Wellness Limited DIRECTORS RESPONSIBILITY STATEMENT As required under section 217 (2AA) of the Companies Act, 1956 your Directors state: (i) That in preparation of the Annual Accounts the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial year 2008-2009 and of the profit or loss of the company for that period; (iii) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (iv) we have prepared the annual accounts on a going concern basis. PARTICULARS OF EMPLOYEES As required by the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975, there are no employees in your Company whose names are to be mentioned in the Directors report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO The details as required under Clause (e) of sub section (I) of Section 217 of the Companies Act, [956 read with-the Companies (Disclosure of Particulars in Report of Board of Directors) Rules 1988 are applicable as follows: Form - A : Particulars with respect to Conservation of Energy Power and Fuel Consumption 2008-2009 2007-2008 1. SIDCUL Power purchased (KHW) 205300 13958 (Units) (Units) 2. Total Amount Rs. 1808935 Rs. 468928 Rate per unit Rs. 8.81* Rs. 33.60* 3. Captive Generation 148 Hr. Nil DG Set (KWH) 9627 Nil (Units) (Units) Total Amount Rs. 79382 Rs. Nil Rate per-unit Rs. 8.25 Rs. Nil 4. Diesel Consumption (Litres) 2238 534.05 Total Amount Rs. 79,382 Rs. 19,653 Rate/Litre Rs. 35.47 Rs. 36.80 5. Generation of power is as per industry standards due to proper load distribution and effective maintenance of Generators. * Inclusive of fixed cost charges per KVA Form - B: Particulars with respect to Technology Absorption A. Technology Absorption 1. Efforts in brief towards Technology Localization of Inner parts of Adoption and Innovation Paint Brushes. Developed in house development of paint brushes: plastic handles instead of wooden handles. use of mono filament instead of Animal Hair. 2. Benefits derived as a results of Cost Effectiveness above efforts e.g. Product Improvement, Cost Reduction, Uninterrupted Supply of Product Development, Import Finished Goods Substitution etc. New Developed Product(s) are more quality efficient and standardized. B. Research and Development: Nil C. foreign Exchange Expended : Rs. 214,391,395 Foreign Exchange Earned : NIL MANAGEMENT DISCUSSION AND ANALYSIS REPORT A separate report on Management Discussion and Analysis is attached as a part of this Report. ACKNOWLEDGEMENT The Directors place on record their appreciation for the faith and trust reposed by the Bankers, Shareholders and all other business associates. The directors wish to thank their principals, viz. Denman International Ltd., U.K. and Keune Hairecosmetics, Holland for their continued support, guidance and commitment to Indian market and investment in the equity of your Company. Your directors also wish to thank all those individuals/ entities/corporate bodies/financial institutions, who have invested in the equity of your Company and have reposed their faith in the management and the vision of the management. The Directors also appreciate the support and contributions made by the employees during the year. On behalf of the Hoard FOR BRUSHMAN (INDIA) LIMITED Place : New Delhi Date : 01.09.2009 KAPIL KUMAR ROHIT SOOD MANAGING DIRECTOR WHOLE-TEME DIRECTOR MANAGEMENT DISCUSSION AND ANALYSIS CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. OVERVIEW: PAST, PRESENT & FUTURE The Company holds its leadership position in the paint brush industry both in terms of volume and value. BIL is the largest manufacturer of paint brushes in India by a wide margin. The Company enjoys substantial brand niche in an industry largely dominated by unorganized sector and has significant market share. But due to Global Recession and slowdown in reality and infrastructure sector there is severe impact on the sales and Margins of the Company in third and fourth quarter for the year ending 31st March 2009. INDUSTRY ANALYSIS BIL is the only organized player in the paint brush industry in India, with Brushman being the largest selling paint brush in India. With the recession hitting the global markets there has been sever effect on the Company profits and sales volume. At present the housing, reality and infrastructure sector is showing signs of revival and therefore the management is hopeful and positive that the Company would show better financial results in the coming period. MANUFACTURING DIVISION: As the members are aware, your Company is in the business of manufacturing and trading of paint brushes etc. Due to global recession which has grossly affected the housing, infrastructure and reality sector in the economy has in turn, negatively impacted the manufacturing business line of the Company during the last fiscal. Your directors would like to inform you that the management is hopeful and positive that the Company would definitely do better in the coming period(s) as the markets globally is now showing signs of economic recovery. Your Company is operationalizing through its manufacturing plant in Pantnagar, Uttarakhand and is the leading paint brush manufacturing Company in India. The management is realigning its manufacturing expansion plans in the light of present economic condition and would take suitable decisions in the best interest of the Company. TRADING DIVISION In the trading division your Company has deferred its plan(s) of expansion as the global recession has majorly effected the retail sector. Your Company holds the distributor rights for leading brands of the world in trading segment and hopeful that this business line would revive soon as the market is recovering and demand for niche products is picking up. SALONS /ACADEMIES DIVISION: Your Directors wish to inform you that due to global recession and current slowdown in the market the management had during the year decided to close down the operations of the following salons due to high rentals and other input costs which had contributed towards their operational unviability in the current scenario. Following is the details of the salons/academies which have been closed down: - Keune the salon al Infinity Towers, DLF Phase III, Gurgaon - Keune the salon at MGF City Centre Mall, Rajouri Garden, New Delhi - Keune the salon at TDI Mall, Rajouri Garden. New Delhi - Keune the salon at North Square Mall, Pitampura, New Delhi-110034 - Scratch Hie Academy at IIIrd Floor. E-5. Part-II. R.K. Jewellers Building. New Delhi-1100-18 Your directors wish to inform you that following salons/academies are operational as on date: - Keune the salon at Greater Kailash- 1 (M Block market), New Delhi - Keune the salon at MGF Metropolitan Mall, Gurgan, Haryana. - Keune the salon at J-12/14, Rajouri Garden, New Delhi - Keune the salon at Mariplex Mall, Kalyani Nagar, Pune - Keune The Academy, E-5, South Extension, Part-II. IInd Moor, R.K. Jewellers Building. New Delhi- 110048 SWOT ANALYSIS OF BIL Strengths: - The Company is a market leader in paint brush industry by a wide margin. - Brushman enjoys strong brand recognition in the paint brush segment for its innovations. - It has successfully introduced alternative raw materials, which have increased margins. - Brushman is recognised as one of the leading distribution houses for marquee beauty and cosmetic brands. - Brushman has been able to recognize and influence emerging fashion trends and introduce contemporary brands and products Weaknesses: - Paint-brush market is still an unorganised sector resulting in huge investments in user awareness and training. - Grey market for some beauty and cosmetic products exists, though small in size. Opportunities: - Growing user industry of paint brushes owing to boom in the economy. - Increasing affluence of consumers due to high GDP growth. - Rising awareness due to globalisation. Threats: - Ever evolving fashion trends. - Increasing presence of competitive brands in the market. Outlook: With the revival in the construction, housing, reality and infrastructure industry after recession the pant brush market is set for a growth and the Company being a leader is expected to be a major gainer. In the beauty and cosmetic industry, the rise in GDP. income levels and awareness of latest fashion and trends, is leading to double digit growth. The ongoing revival in retail sector in the beauty salon is acting as a catalyst to the growth of the cosmetic trading division of the Company. The Company is expected to gain substantially with all these developments in the medium to long term and sail through the tough times.